American Radio Stations Would Rather Block Their Streams Than Pay Foreign Royalties…

British performing right society PPL is now contacting big US radio stations demanding that they either start paying royalties or block webcasts from being accessed in the UK. So far, stations are choosing to block rather than pay.

In its email to US broadcasters, PPL points out that major radio groups such as Clear Channel and CBS Radio already geo-block their webcasts. So far, no broadcaster has opted to negotiate a licence with the collecting society, apart from a few pureplay operators, including Live365.

pplletter

PPL negotiates and collects royalties for performing rights to owners of the master recordings, performers and non-featured musicians. Essentially, it’s the British version of SoundExchange. However, unlike US stations, UK terrestrial radio stations are required to pay performers as well as songwriters, and PPL collects for those royalties as well.

PPL has a reciprocal agreement with SoundExchange for online performance royalties, meaning that UK artists get paid when their music is listened to on American online radio stations, and vice versa. Or at least they’re supposed to – as online broadcasters are required to pay PPL when the music they play is listened to in Britain.

“The licensing of webcasting is based upon the country in which the webcaster’s stream is accessed, rather than the country in which the stream originates (or the country in which the webcaster’s servers are based),” explains Jonathan Morrish of PPL.

“In the case of the US, the SoundExchange-administered statutory licence only covers webcasting of recorded music in the United States. Therefore a US-based webcaster would also need to ensure that they are licensed for their streaming of recorded music into each country outside the US, or they must ensure that they have geo-locked their service so that it is only available for streaming in countries in which they are appropriately licensed.”

PPL’s email highlights the need for US-based online radio broadcasters to keep track of where on earth their listeners are based – after all, they need to deduct those listening figures from the data they supply to SoundExchange.

The only problem is, no one’s paying (for various reasons). One American radio executive told Inside Radio that striking a deal with PPL could set a precedent and “open the door to rights organisations from around the world coming after US broadcasters”, indicating most broadcasters will opt for geo-blocking.

The director of digital strategy for Cox Media Group, one of the broadcasters that have received the PPL letter, claimed that while 30% of its web listening comes from out-of-market users, a “much smaller” percentage is international.

PPL’s royalty rate for a commercial online radio station is £0.000722 per performance (one performance is when one listener streams one recorded music track broadcast in the service). The rate for customised broadcasting – when listeners can skip or pause tracks – varies, depending on how often they’re allowed to skip tracks etc.

UK residents listen to plenty of online radio, including a multitude of BBC stations – including the brilliant BBC6 Music and 1Xtra – and commercial stations. Matter of fact, there are hundreds of online radio stations. For those wanting to go even more niche, there’s Amazing Radio, which plays plenty of unsigned artists.

 

Clearly, it’s more than possible to run an online radio station while paying artists and songwriters properly. Perhaps if US broadcasters lowered their profit expectations, they wouldn’t have to geo-block. The likelihood of that, of course, is pretty much nil.

12 Responses

  1. gary jackson

    Instead of all this “you owe me I owe you” nonsense, why don’t radio stations pay royalties according to the total number of listeners irrespective of where they are in the world? Or are broadcasters going to have to write a cheque for every country in world?

    Fm payments are based upon estimated listener numbers so why is the industry getting all worked over about five people listening online? Do as I suggest, sack the people involved in writing these emails and you’ll save more than you’ll make from two listeners in Tristan de cuna

    Reply
  2. Visitor
    Visitor

    People say France is the next big thing in movies.

    Wonder if the UK is the next big thing in music.

    The Brits pay artists, they have an interesting CV to say the least, and they do a lot these days to stop mainstream piracy.

    I’m beginning to get an I-want-to-be-part-of-this feeling.

    Reply
  3. David
    David

    For a commercial radio station there is no point in broadcasting to a territory if they get no advertising revenue from it. US online radio stations could in theory get advertising revenue from the UK or elsewhere, but they are not geared up for it, and it would probably be more trouble than it is worth. If they have no significant costs from non-US broadcasting, they don’t need to block it, but if they do, they do.

    Reply
    • Tune Hunter
      Tune Hunter

      “For a commercial radio station there is no point in broadcasting to a territory if they get no advertising revenue from it.”

      There is a point! – if the radio station becomes a main stream music store!

      I will try to be very concise:

      First we form an industry wide Central Discovery & Delivery Bank.

      http://www.CDDB.com

      This bank would store the media and assign a “license plate” to every song – this interactive license would always contains artist and song writer info then we add as needed code for radio station requesting and broadcasting the tune, or label info which created the artist (it can be Starbucks, great radio DJ or Victoria Secret). This license is undetectable to human ear but is fully visible to any ID service. (it is old and ready to go technology – no dreaming)

      Than http://www.CDDB.com grants license to Shazam and all other ID services so they can become profitable co-retailers of music. NO MORE FREE ID TO ANYONE. Next all radios to become retailers will kill radio display information Last we do some promotion and start the take off to new digital music era.

      ALL FOLKS including iTunes, YouTube and Spotify will deliver from the same CDDB. If we can make it to this point fun and big cash will start for everyone and only imagination will place the limits on types of entities able to monetize the music and media.

      Just look at three examples below:

      The best Spotify user no longer pays just subscription he pays 20 cents for first stream CDDB converts him to owner after 5 additional 7 cents streams = 55cents rent to own

      Different music fan just buys the same tune for 49 cents outright.

      Another one pr-epurchases 100 tunes with Soundhound for $35

      YouTube after 90s of free play is blocked and than Shazam scan of QR Code unblocks it for instant single play for 20c or outright purchase for xx!

      In all cases CDDB will know to whom and how much to transfer with monthly report. Cash for: radio station that created the artist (in some cases on global success), cash for Shazam for ID service, cash to artist and song writer, cash to label (if there is one) and again cash to radio which played the tune.

      NO MORE RADIO ROYALTIES, new opportunities for Musak style services delivering the best tunes to any place with steady micro crowd.

      Discovery Moment Monetization should rule!

      Reply
      • GGG
        GGG

        We can even have undercover agents in every bar in the world so when you ask your friend what song this is, the agent will swoop in a demand the royalty!

        Reply
        • Tune Hunter
          Tune Hunter

          The amount of new and brilliant music unknown to public (or your friends) is mind-boggling!
          Lets discover this music and make some cash at the same time.
          This will call for very creative and profit-making play lists. Best ever times for radio DJs coming soon.
          Some nuggets sporadically inserted from different genre will bring pleasant surprises and easy cash.

          My proposal is simple and brings walls to music bazaar blown all over the town.

          Under new terms we will pay for the music or folks will get frustrated, grind their teeth and give money to dentist!

          Reply
      • David
        David

        Well, good luck with that, but my point was that with the *existing* economics of radio, a US radio station has no motive to allow people outside the US to use it. So long as they don’t actually incur any costs, they may not bother to block non-US users, but if there are costs, of course they will prefer blocking.

        Reply
        • Adrian B
          Adrian B

          You are quite correct David. Something that artists don’t seem to understand is that radio stations don’t earn money from playing music, they earn money from playing commercials. They play music (which is free exposure and advertising for the artists) to get people to listen to the commercials. Those commercials are mostly from local or regional businesses, and those advertisers aren’t going to pay extra to advertise their Chevy dealer in Boise to the London market. This why internet radio stations can’t really make any significant money, and in fact most lose money, yet they still have to pay royalties for something they are losing money on. This is what the whole Internet Radio Fairness Act is all about, trying to get the royalties lowered so these stations can stay in business and keep playing the music. Until the Brits start hopping planes in mass and flying over here to buy a new lawn mower at the Ace Hardware down the street there is no reason for Ace to pay for streaming ads.

          Reply
          • Yves Villeneuve
            Yves Villeneuve

            If Internet radio stations want to be profitable they can charge a monthly subscription fee like satellite radio companies do. Playing artist music is a radio station cost much like streaming a TV show is a TV network cost.

          • Tune Hunter
            Tune Hunter

            Yes, I agree, and then they can offset most if not all of this operating cost with mandatory Discovery Moment payments.

          • A-lyric.com
            A-lyric.com

            Another option is to go afgter those markets and provide geo-based advertising – not that difficult in this day and age.

          • Visitor
            Visitor

            “This why internet radio stations can’t really make any significant money, and in fact most lose money, yet they still have to pay royalties for something they are losing money on.”

            Of course they still have to pay royalties. Just because your business model sucks and is curreny unprofitable doesn’t mean you get to stock your store for free…

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